As 1960 dawned, sub-Saharan Africa braced for historic change: that year, 17 of its countries were destined to gain independence from European colonial powers.
But six decades on, the continent is mired in many problems. It is struggling to build an economic model that encourages enduring growth, addresses poverty and provides a future for its youth.
Here are some of the key issues:
Africa’s population grew from 227 million in 1960 to more than one billion in 2018. More than 60 percent are aged under 25, according to the Brookings Institution, a US think tank.
“The most striking change for me is the increasing reality of disaffected youth… a younger population that is ready to explode at any moment,” Cameroonian sociologist Francis Nyamnjoh told AFP.
“They are hungry for political freedoms, they are hungry for economic opportunities and they are hungry for social fulfilment .”
Joblessness is a major peril. Unemployed youths are an easy prey for armed groups, particularly jihadist movements in the Sahel, or may be tempted to risk clandestine emigration, often at the cost of their lives.
The continent’s population is expected to double by 2050, led by Nigeria, Ethiopia and Democratic Republic of Congo (DRC).
Poverty and inequality
The proportion of Africa’s population living below the poverty line —- less than $1.90 (1.7 euros) per day —- fell from 54.7 percent in 1990 to 41.4 percent in 2015, according to the World Bank.
But this average masks enormous differences from one country to another, exemplified by Gabon (3.4 percent of the population in 2017) and Madagascar (77.6 percent in 2012).
“The inequalities between countries are as extreme as in Asia and the inequalities within countries as as high as in Latin America, where landless peasants coexist with huge landowners,” said Togolese economist Kako Nubukpo.
Christophe Cottet, an economist at the French Development Agency (AFD), pointed out that inequality in Africa is “very poorly measured.”
“There are notably no figures on inequalities of inherited wealth, a key issue in Africa.”
Mega-cities and countryside
Recent decades have seen the expansion of megacities like Lagos and Kinshasa, typically ringed by shantytowns where people live in extreme poverty, although many medium-sized cities have also grown.
More than 40 percent of Africans now live in urban areas, compared with 14.6 percent in 1960, according to the World Bank.
In 1960, Cairo and Johannesburg were the only African cities with more than a million residents. Consultants McKinsey and Company estimate that by 2030, about 100 cities will have a million inhabitants, twice as many as in Latin America.
But this urban growth is not necessarily the outcome of a rural exodus, said Cottet.
“The population is rising across Africa as a whole, rather faster in towns than in rural areas,” said Cottet.
“There is also the problem of unemployment in towns — (rural) people have little interest in migrating there.”
Lost decades of growth
Growth in Africa slammed to a halt in the early 1980s, braked by a debt crisis and structural adjustment policies. It took two decades to recover.
Per-capita GDP, as measured in constant US dollars, shows the up-and-downs, although these figures are official and do not cover Africa’s large informal economy: $1,112 in 1960, $1,531 in 1974, $1,166 in 1994 and $1,657 in 2018.
“If you do an assessment over 60 years, something serious happened in Africa, with the loss of 20 years. But there is no denying that what is happening now is more positive,” Cottet said.
The IMF’s and World Bank’s structural adjustment programmes “broke the motors of growth,” said Nubukpo, whose book, “L’Urgence Africaine,” (The African Emergency) makes the case for a revamped growth model.
The belt-tightening programmes “emphasised the short term, to the detriment of investments in education, health and training.”
New thinking needed
Africa has a low rate of industrialisation, is heavily dependent on agriculture and its service sector has only recently started to emerge.
“We have not escaped the colonial model. Basically, Africa remains a producer and exporter of raw materials,” said Nubukpo.
He gave the example of cotton: 97 percent of Africa’s cotton fibre is exported without processing — the phase which adds value to raw materials and provides jobs.
For Jean-Joseph Boillot, a researcher attached to the French Institute for International and Strategic Affairs, “Africa is still seeking an economic model of development.”
“There is very little development of local industries,” he said.
“This can only be achieved through a very strong approach, of continental industrial protection — but this is undermined by the great powers in order to pursue free trade.
“The Chinese, the Indians and Westerners want to be able to go on distributing their products.”
Lack of democracy, transparency and efficient judicial systems are major brakes on African growth, and wealth is concentrated in the hands of a few, said the experts.
Of the 40 states deemed last year to be the most world’s most corrupt countries, 20 are in sub-Saharan Africa, according to Transparency International.
“Africa is not developing because it is caught in the trap of private wealth and the top wealth holders are African leaders,” said Nubukpo.
“We must promote democracy, free and transparent elections to have legitimate leaders who have the public interest at heart, which we absolutely do not have.”
Nyamnjoh also pointed to marginalised groups — “There should be more room for inclusivity of voices, including voices of the young, voices of women.”
Spain voted Sunday in its fourth general election in as many years amid heightened tensions over the separatist push in Catalonia that has fuelled a surge in support for upstart far-right party Vox.
The repeat polls were called after Prime Minister Pedro Sanchez failed to secure support from other parties following an inconclusive election in April which saw his Socialist party win the most votes, but no working majority in parliament.
Opinion polls however suggest this new election will fail to break the deadlock. Neither the left nor the right look likely to win a ruling majority in Spain’s 350-seat parliament.
The Socialists are on track to finish top again, but with slightly fewer seats than the 123 they picked up in April, while the main opposition conservative Popular Party (PP) may strengthen its parliamentary presence.
But the most striking development could be the rise of the far-right Vox party, which might even jump to third-largest in parliament, according to polling.
Party leaders from across the political spectrum urged Spaniards to head to the polls.
Sanchez told reporters after voting in Madrid that “it is very important that we all participate to strengthen our democracy” and “have the needed stability to be able to form a government”.
The last election produced a near-record 76 percent turnout, which helped Sanchez who had mobilised left-leaning voters to oppose Vox but analysts warn the numbers will likely drop this time, as Spaniards suffer election fatigue.
Voting stations will close at 8:00 pm, with results expected a few hours later.
The election comes as Spain finds itself increasingly polarised by the Catalan crisis, which has deepened in recent weeks.
Less than a month ago, the Supreme Court sentenced nine Catalan separatist leaders to lengthy jail terms over their role in a failed 2017 independence bid, sparking days of angry street protests in Barcelona and other Catalan cities that sometimes turned violent.
More than 600 people were injured in the protests, which saw demonstrators torching barricades and throwing stones and Molotov cocktails at police.
During a TV election debate PP leader Pablo Casado called for a “real government that will put order in Catalonia”.
But the toughest line against the Catalan separatists has come from Vox leader Santiago Abascal.
“Drastic solutions are needed,” he said during his final campaign rally on Friday night in Madrid.
He then repeated his pledge to end the Catalan crisis by suspending Catalonia’s regional autonomy, banning separatist parties and arresting its regional president, Quim Torra, who has vowed to continue the secession drive.
The crowd responded by chanting “Torra to the dungeon”.
At the rally, Ana Escobedo said she has voted for the PP in the past but was drawn to Vox because of its hard line on Catalonia as well as illegal immigration.
“I think we need to take a heavy hand,” she said.
‘Remain difficult ‘
Vox won 24 seats in parliament in the last election in April, in the first significant showing by a far-right faction since Spain’s return to democracy following the death of dictator Francisco Franco in 1975.
This time Vox could double that number, polls suggest.
In recent days, Sanchez has repeatedly raised the alarm about Vox’s “aggressive ultra-rightwing” policies, warning the party would drag the country back to the dark days of Franco’s dictatorship.
Spain has been caught in political paralysis since the election of December 2015 when far-left Podemos and business-friendly Ciudadanos entered parliament.
That put an end to decades of dominance of the two main parties, the PP and the Socialists, in the eurozone’s fourth-largest economy.
But there is a risk Sunday’s vote will only prolong the agony.
With no single party able to secure the required 176 seats for a majority, the Socialists are likely to opt for a minority government, ING analyst Steven Trypsteen said.
“Voting intentions appear to have changed since the April election. But these changes will not make it easier to form a government, so the political situation is likely to remain difficult after this weekend’s vote,” he added.
Major European players are joining forces to block Facebook’s proposed digital currency because of the dangers it poses to national sovereignty, French Economy Minister Bruno Le Maire announced Friday,
The firm opposition from France, Italy and Germany added to the mounting resistance faced by the tech giant’s troubled foray into digital finance.
The Group of 20 economies also warned Friday of “serious” risks of money laundering, fraud and illicit finance posed by Libra, the social media network’s digital currency.
Italy, Germany and France will take unspecified steps in the coming weeks “to show clearly that Libra is unwelcome in Europe because our sovereignty is at stake,” Le Maire told reporters on the sidelines of the annual meetings of the World Bank and International Monetary Fund in Washington.
“We will not allow a private company to have the same power, the same monetary power as sovereign states,” he added.
“The major difference between Facebook and governments is that we are subject to democratic control, that is the control of the people.”
The Group of Seven economies on Thursday had said any reserve-backed digital currency like Libra — known as a stablecoin — would require a sound legal framework before entering circulation.
But European officials say they want to go even further by blocking the currency outright.
Like Le Maire, German Finance Minister Olaf Scholz also said Friday he was “very skeptical” about Libra.
“I favor not allowing the establishment of such a global currency because that is the responsibility of democratic states,” he said.
But Scholz said he recognized the need for banking reforms to make cross-border payments more simple, cheap and speedy.
Answer: a clear ‘no’
“At the same time, we must protect the autonomy of democratic states,” he said.
Libra also has faced challenges from within after major financial and commercial players in recent weeks have backed out of the project, including Visa, Mastercard, eBay, Stripe, PayPal and the online travel firm Bookings Holdings.
But the Libra Association has tried to ward off a blockade by saying it will address the concerns posed by government officials.
“I repeat our priority today is to work with regulators to answer their legitimate questions and provide all necessary assurances,” said Bertrand Perez, managing director of the association.
Le Maire, however, appeared to rule out such cooperation with Facebook, noting that the social media giant planned to tie its cryptocurrency to a basket of reserve assets.
“All Facebook would have to do would be to decide to use more or fewer dollars or euros to affect the exchange rate between the euro and the dollar, and thus have a direct impact on trade, industry and nations which use the dollar or euro as their base currency,” he said.
This could harm monetary policy and affect governments’ efficiency, he added.
“Do we want to put monetary policy in the hands of a private company like Facebook? My answer is clearly no,” he said.
Still, he said he was not opposed to the creation of a digital currency, which France could develop “in a European framework.”
“The right answer is not a private digital currency under the control of one of the largest multinationals on the planet,” he said, referring to Facebook’s more than two billion users.
The Libra association officially launched Monday in Geneva with 21 founding members, including the telecoms firms Vodafone and Iliad, as well as tech outfits Uber, Spotify and Farfetch, blockchain operations such as Anchorage, Xapo and Coinbase and the venture capital firm Andreessen Horowitz.
President Emmerson Mnangagwa on Tuesday acknowledged the economic hardships Zimbabweans are suffering and pleaded for patience to allow his government to fix the country’s rapidly deteriorating economy.
Zimbabwe’s economy has been badly suffering for two decades but the last 12 months have been the worst decline in 10 years, characterised by shortages of basic goods such as fuel and electricity.
Even when such goods are available, they are often unaffordable for most Zimbabweans.
Annual inflation neared 300 percent in August, according to the International Monetary Fund.
The government has been introducing what economists have called “piecemeal” policies to raise revenue, fix currency distortions and increase cash liquidity.
But Mnangagwa was upbeat in an annual speech to parliament on Tuesday, saying that his government’s economic reforms “are beginning to bear fruit”.
“I am aware of the pain being experienced by the poor and the marginalised”, but “getting the economy working again will require time, patience, unity of purpose and perseverance”.
The local currency has fallen from parity against the American dollar to 16.5 Zimbabwean dollars (ZWL) since June, when the treasury introduced currency reforms in a bid to address the chronic monetary crisis.
The local unit briefly breached 20 against to the greenback last week before clawing back a little value.
“Last week’s events of exchange rate manipulation amounts to economic sabotage and should not be tolerated,” said Mnangagwa, referring the near crush of the currency which saw the central bank freeze bank accounts of a Zimbabwean company linked to global commodities trader Trafigura.
On Monday the central bank unexpectedly shut down the use of mobile phone banking for cash transactions, citing exorbitant commission fees.
Years of economic crisis have left the country short of bank notes and commercial banks have been rationing cash withdrawals to a maximum daily limit of 100 ZWL (US$10) per customer.
That limit has led many Zimbabweans to turn to electronic financial transactions as well as using mobile transfers to buy cash.
Mnangagwa said he was “fully aware of the challenges faced by the public in accessing cash, which has resulted in some unscrupulous traders selling cash in exchange for electronic money” and promised to fix the problem.
Nelson Chamisa, the leader of the main opposition party Movement for Democratic Change, said that a state-of-the-nation address “that does not address key issues facing the nation such as lack of electricity, water, fuel, non availability of cash, poor wages, human rights abuses, terror, abductions, illegitimacy and reforms is a waste of resources and an unprovoked insult”.
“This invites us all to act!” Chamisa said after his lawmakers walked out of parliament shortly before Mnangagwa stood up to deliver his speech.
A UN special rapporteur Clement Nyaletsossi Voule visited Zimbabwe last week and concluded that “there is a serious deterioration of the political, economic and social environment since August 2018”.
Mnangagwa won a July 30 election last year, taking over after 37 years of authoritarian rule under Zimbabwe’s founding president Robert Mugabe, who died in hospital last month.
President Muhammadu Buhari has reiterated his administration’s commitment to ensuring that the trade and business sector continues to flourish.
He gave the assurance while addressing a delegation from the Nigerian Association for Chamber of Commerce, Industry Mines and Agriculture (NACCIMA), the Federation of West African Chambers of Commerce and Industry (FEWACCI) and representatives of the Organised Private Sector (OPS) at the State House in Abuja.
The President, however, urged Nigerians to play by the rules in the area of trade and business which he believes are critical to Nigeria’s economic development.
According to him, markets have been flooded with smuggled and counterfeit goods as a result of non-adherence to rules.
He, however, stated that the temporary closure of the nation’s borders has yielded results and has helped in reducing the rate of smuggling.
A former Deputy Governor of the Central of Nigeria (CBN) Kingsley Moghalu on Tuesday said the members of the newly inaugurated Economic Management Team (EMT) are competent and he hopes President Muhammadu Buhari’s will listen to them.
Moghalu disclosed this in an interview on Channels Television’s Politics Today.
“This Council will advise the President but we hope that the President will listen to their advice. The team as composed in this Council is a competent team, there is no question about it.
“But we want to see that he will listen to their advice. When the Council advises the President, if the President agrees with their advice, he should now direct the ministers to execute these economic agendas,” he said.
Moghalu, who is also the presidential candidate of the Young Progressives Party (YPP), explained that the ministers will not be part of the EMT because they are burdened with the responsibility of managing the nation’s economy.
He also called on the Federal Government to effectively engage with and consult the private sector, adding that Vice President Yemi Osinbajo should be carried along with key economic decisions of the Council.
When asked of his views on President Buhari’s efforts to lift over 100 million Nigerians from poverty, Professor Moghalu noted that was a good initiative.
He concluded that for the feat to be made, the Federal Government must put in place the needed blueprint that will be a work in progress, adding that “a foundational economic philosophy for the Nigerian state” must be created.
India’s space programme suffered a huge setback Saturday after losing contact with an unmanned spacecraft moments before it was due to make a historic soft landing on the Moon.
Prime Minister Narendra Modi sought to comfort glum scientists and a stunned nation from mission control in Bangalore, saying India was still “proud” and clasping the visibly emotional space agency head in a lengthy hug.
Blasting off in July, the emerging Asian giant had hoped to become just the fourth country after the United States, Russia and regional rival China to make a successful Moon landing, and the first on the lunar South Pole.
But in the early hours of Saturday local time, as Modi looked on and millions watched nationwide with bated breath, the Vikram lander — named after the father of India’s space programme — went silent just 2.1 kilometres (1.3 miles) above the lunar surface.
Its descent had been going “as planned and normal performance was observed”, Indian Space Research Organisation (ISRO) chairman Kailasavadivoo Sivan said.
“Subsequently the communication from the lander to the ground station was lost,” he said after initial applause turned to bewilderment at the operations room. “The data is being analysed.”
The Chandrayaan-2 (“Moon Vehicle 2”) orbiter, which will circle and study the Moon remotely for a year, is however “healthy, intact, functioning normally and safely in the lunar orbit”, the ISRO said.
– Consoler-in-chief – Freshly re-elected Modi had hoped to bask in the glory of a successful mission, but on Saturday he deftly turned consoler-in-chief in a speech at mission control broadcast live on television and to his 50 million Twitter followers.
“Sisters and brothers of India, resilience and tenacity are central to India’s ethos. In our glorious history of thousands of years, we have faced moments that may have slowed us, but they have never crushed our spirit,” he said.
“We have bounced back again,” he added. “When it comes to our space programme, the best is yet to come.”
Other Indians also took to Twitter to offer words of encouragement. “The important thing is we took off and had the Hope and Belief we can,” said Bollywood superstar Shah Rukh Khan.
Indian media offered succour by quoting a NASA factsheet that said out of 109 lunar missions in the past six decades, 48 have failed.
Chandrayaan-2 took off on July 22 carrying an orbiter, lander and rover almost entirely designed and made in India — the mission cost a relatively modest $140 million — a week after an initial launch was halted just before blast-off.
ISRO had acknowledged before the soft landing that it was a complex manoeuvre, which Sivan called “15 minutes of terror”.
It was carrying rover Pragyan — “wisdom” in Sanskrit — which was due to emerge several hours after touchdown to scour the Moon’s surface, including for water.
According to Mathieu Weiss, a representative in India for France’s space agency CNES, this is vital to determining whether humans could spend extended periods on the Moon.
That would mean the Moon being used one day as a pitstop on the way to Mars — the next objective of governments and private spacefaring programmes such as Elon Musk’s Space X.
In March Modi hailed India as a “space superpower” after it shot down a low-orbiting satellite, a move prompting criticism for the amount of “space junk” created.
Asia’s third-largest economy also hopes to tap into the commercial possibilities of space.
China in January became the first to land a rover on the far side of the Moon. In April, Israel’s attempt failed at the last minute when its craft apparently crashed onto the lunar surface.
India is also preparing Gaganyaan, its first manned space mission, and wants to land a probe on Mars.
In 2014, it became only the fourth nation to put a satellite into orbit around the Red Planet, and in 2017 India’s space agency launched 104 satellites in a single mission.
The country’s principal scientific adviser, K Vijay Raghavan, described Chandrayaan-2 as “very complex, and a significant technological leap from previous missions of ISRO” in a series of tweets on Saturday.
Raghavan said the orbiter will help India better understand the Moon’s evolution, mapping minerals and water molecules “using its eight state-of-the-art scientific instruments”.
“After a moment of despondency, it is back to work!! It is inspirational to see this characteristic of science in collective action. Kudos to ISRO,” he added.
ISRO in a late Saturday statement said that the orbiter’s “precise launch and mission management has ensured a long life of almost 7 years instead of the planned one year.”
“The Orbiter camera is the highest resolution camera (0.3m) in any lunar mission so far and shall provide high resolution images which will be immensely useful to the global scientific community,” it added.
The German economy could enter a recession in the third quarter, the Bundesbank warned Monday, as the debate on government measures to support the economy swelled in Berlin.
“The economy could contract again slightly” this summer, Germany’s central bank said in its monthly report, following a 0.1-per cent decline in gross domestic product (GDP) in the second quarter.
“According to data currently available, industrial production is expected to shrink markedly in the current quarter as well.”
Having seen a decline in trade against the backdrop of the US-China trade war, two of its main customers, Europe’s biggest economy will enter what it technically defines as a recession should GDP shrink further.
Alarmist signals are reviving the political debate between those who support the German government’s dogma of balanced budgets and those seeking more flexibility in order to revive the economy.
Germany can afford it on paper after five consecutive years of budget surpluses and interest rates for long-term loans that are extremely attractive to the federal government.
As US-China tensions intensify, economists have urged Berlin to fork out cash to avoid a recession, but Chancellor Angela Merkel’s government has previously said things were not yet bad enough to warrant loosening the purse strings.
Citing anonymous sources, Der Spiegel news magazine said Friday that the government “had no intention of continuing to set aside money in the event of a recession”.
That would mean abandoning the so-called “black zero” doctrine committing the German state to a balanced budget.
On Sunday, German Finance Minister Olaf Scholz hinted at a potential intervention, stating that Germany could “fully face up to” a new economic crisis.
“It is sometimes important, when things change completely, for example, for us to have enough strength to react,” he said during an open house day at government offices.
“If we have debt in Germany that is less than 60 per cent of our GDP, that is the strength we need to stand up to a crisis,” he added.
Scholz pointed to the estimated 50 billion euros ($55 billion) that the 2008-09 financial crisis had cost the German government.
“We have to be able to muster that and we can muster that –- that’s the good news.”
In particular, several Social Democrats, junior partners in Merkel’s coalition government, want Germany to draw on its reserves to finance a plan to combat global warming or infrastructure works.
Flexibility instruments could enable Berlin to draw on its large budget surplus of 1.7 per cent of its GDP as early as September.
Merkel’s conservatives have so far resisted and abandoning the popular balanced budget stance seems unlikely with major regional elections looming in September and October.
The top executives at large US companies are paid 278 times more than their company’s workers and the gap continues to widen, according to a study published Wednesday.
Average CEO compensation at the 350 largest US firms in 2018 was $17.2 million a year, including stock options, which generally account for two-thirds of their pay packages, according to a study by the Economic Policy Institute.
The gap between CEO and workers has soared from 58-to-1 in 1989 and 20-to-1 in 1965, according to EPI, a nonpartisan think tank that focuses on issues facing low- and middle-income workers.
From 1978 to 2018, CEO compensation has increased by more than 1,000 percent — with increasingly rich stock awards — while worker pay has risen just under 12 percent.
“This escalation of CEO compensation, and of executive compensation more generally, has fueled the growth of top 1.0% and top 0.1% incomes, leaving less of the fruits of economic growth for ordinary workers and widening the gap between very high earners and the bottom 90%,” the study said.
“The economy would suffer no harm if CEOs were paid less (or taxed more).”
And the study said the pay inflation “does not reflect rising value of skills, but rather CEOs’ use of their power to set their own pay. And this growing power at the top has been driving the growth of inequality in our country.”
Zambia’s President Edgar Lungu has fired Finance Minister Margaret Mwanakatwe, a statement from the presidency said Monday, as the economy grows at its slowest rate in 20 years.
Mwanakatwe, 57, was appointed only last year but was removed on Sunday without any reason given and replaced by central bank deputy governor Bwalya Ng’andu.
“I hereby terminate your appointment as minister of finance,” Lungu stated in his letter to Mwanakatwe according to the statement.
Ng’andu was sworn in on Monday, in a move welcomed by international investment markets with Zambia’s Eurobonds rising sharply. The price of its $750 million of securities due in September 2022 rose 5.2 percent on Monday, according to Bloomberg News.
The newly appointed Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mele Kyari, has pledged closer ties with the Nigerian Governors’ Forum to ensure the growth of the economy.
While meeting with the NGF delegation in his office, Mr Kyari explained that the partnership will also grow renewable energy and generate revenue for the country.
“What is important to Nigerians are two things – fuel supply and absence of queues in fuel stations. And the second part of this is very critical. How much money we deliver from our transactions into the federation account.
“These two elements are critical and they are very important for the well being of this country,” he said.
The NNPC boss also assured the governors that the financials and operations of the corporation would continue to be communicated to them while ensuring fiscal feasibility for the states in consonance with the medium-term expenditure framework.
Read the full report of the bank’s achievements in the past four years and what it hopes to achieve over the next five years, below.
Gov. Godwin Emefiele, CON 5-year Policy Thrust of Central Bank of Nigeria. 2019 – 2024.
Good morning Ladies and Gentlemen and thank you for your presence at this Press Briefing. You would all recall that on 05 June 2014; following my assumption of office as the Governor of the Central Bank of Nigeria, I addressed a similar gathering to share with you my vision for my first term in office. It is in the same vein that we have called you again today to briefly reflect on our journey over the past 5 years, and outline our vision and policy thrust for the next 5 years.
2. But before I begin my remarks, please permit me to thank the Almighty God for giving me the opportunity to continue to serve our country again.
I would also like to thank President Muhammadu Buhari (GCFR) for not only re-appointing me but also for his support and confidence in the leadership of the Central Bank of Nigeria over the past 4 years. I thank the Nigerian Senate as well for confirming my nomination. Finally, I thank the management and staff of the Central Bank of Nigeria, for their hard work and dedication, particularly at moments when the Central Bank and indeed the Nigerian people faced difficult economic conditions.
Whatever achievements the CBN recorded in addressing those difficult conditions, was indeed reflective of the collective efforts of the management and staff of this great institution.
3. In my remarks today, I will be speaking on our efforts towards promoting price and monetary stability, exchange rate stability, financial system stability as well as our efforts to spur growth through our development finance interventions. Thereafter, I will speak on my vision for the Central Bank of Nigeria over the next five years, which is primarily driven by the need to support continued growth and development of the Nigerian Economy.
4. You will recall that during my maiden address on June 5, 2014, I stated that my vision would be to ensure that the Central Bank of Nigeria is more people focused, as its policies and programs would be geared towards supporting job creation, reducing the high level of Treasury-Bill rates, improving access to credit for MSMEs, deepening our intervention program in the Agricultural Sector, building a robust payment system infrastructure that will help drive inclusion, in addition to key macroeconomic concerns such as exchange rate stability, financial system stability and maintaining a strong external reserve.
5. As is the case with most plans, although most of the goals we set were achieved, I would be the first to admit that everything did not happen as contemplated. The normalization of monetary policy in the United States and the over 60 per cent drop in crude oil prices between 2014 and 2016, had significant adverse consequences on our economy and made us adjust our methods to ensure that we still implemented most parts of our vision. Given Nigeria’s dependence on crude oil revenues for close to 86 percent of our foreign exchange earnings and over 60 percent of government expenditure, the drop-in prices led to heightened inflationary pressures, depreciation of our exchange rate, significant drop in our external reserves, and eventually, a recession set in during the 2nd Quarter of 2016.
6. With concerted efforts by the monetary and fiscal authorities, we implemented a series of measures which led to the recovery of our economy from the recession by the 1st Quarter of 2017. Building on these efforts, I am delighted to note that our external reserves have risen from $23bn in October 2016 to over $45billion by June 2019. Inflation has dropped from 18.72 per cent in January 2017 to 11.40 per cent in May 2019. Our CBN purchasing manufacturers index has risen for 26 consecutive months since March 2017, indicating continuous growth in the manufacturing sector, as a result of measures implemented by the CBN which has improved access to raw materials and finance for manufacturing firms. GDP growth has risen for seven consecutive quarters following the recession, and our exchange rate has appreciated from over N525/$1 in February 2017 at the BDC window to N360/$1. With improved inflow of foreign exchange, the exchange rate has remained stable around N360/$1 for the past 27 months.
7. Recovery Efforts
Part of the measures we deployed to support the recovery include tightening of the monetary policy rate in order to rein in inflation; we also created an Investors and Exporters Window which allowed exporters and investors to inflow and sell their foreign exchange at the prevailing market rate. In order to reduce our reliance on the importation of items which could be produced in Nigeria, we restricted access to foreign exchange on 43 items, while deploying our intervention funds to support growth and productivity in the agricultural and manufacturing sectors. These measures helped to support the attainment of our monetary policy objectives such as a reduction in the inflation rate, stability in our exchange rate and improved accretion to our external reserves.
8. Financial System Stability
As some of you are aware, the drop-in commodity prices affected a good number of banks given their exposure to the oil and gas sector. Unfortunately, these resulted in an increase in Non- performing loans of our banks. As a result of risk management measures embarked upon by the CBN, capital adequacy and liquidity ratios of our commercial banks are now above the prudential level.
Capital Adequacy Ratio for the banking industry improved from 11 per cent in June 2017 to over 16 per cent in May 2019 and liquidity levels have also increased by over 20 per cent within the same period. In addition, the ratio of non-performing loans in the banking system has reduced from 15 per cent in June 2017 to 9 per cent in May 2019, due to concerted efforts by the CBN and the DMBs, although more work is being done to moderate NPL levels to the maximum prescribed level of 5 per cent. Our financial institutions are well positioned to perform their intermediation role, which will ultimately help in supporting the growth of our economy.
9. Access to Credit and Developmental Finance
As part of the goals set in 2014, we increased our development finance interventions in order to catalyze growth in critical sectors of the economy. Our objectives were driven by the need to increase investments by MSMEs as well as spur consumer spending, as these factors would have a positive impact on GDP growth and employment. Furthermore, our development finance efforts were driven by the need to reduce our reliance on revenues from crude oil.
10. At a point in our nation’s history, Nigeria survived on revenues from the non-oil sector, to the extent that we were a dominant exporter of agricultural produce into the global market. Some of these products include Cocoa, Groundnuts, Cotton and Palm-Oil. Our focus in agriculture supported the raw material needs of our industrial sector and created employment opportunities for millions of Nigerians. Regrettably, the discovery of crude oil and the increasing reliance on crude oil revenues led to a severe downturn in the agriculture and manufacturing sectors, while also exposing our economy to the vulnerabilities that normally accompany an increased dependence on a single commodity for survival. For example, if Nigeria had maintained its market dominance in the palm oil industry, which stood at 40 per cent in the 70s, we would be earning above $20 billion annually from cultivation and processing of palm oil today.
This would have provided a sufficient buffer for our nation following the drop in crude oil prices. Our situation is further worsened by the unpatriotic activities of some unscrupulous individuals and businesses who embarked on massive smuggling and dumping of goods that can be produced in the country thus leading to the demise of our agricultural and manufacturing sectors and hence the attendant high level of unemployment.
11. Fellow Nigerians, we have a responsibility to reverse the current ugly trend where any external shock affecting oil producing countries bring us to our knees.
12. To correct this trend and as part of our intervention programs, we launched the Anchor Borrowers Program, which has improved access to finance for over 1m smallholder farmers, who are leading our efforts to improve cultivation of agricultural commodities, such as rice, tomatoes, fish, cotton and palm oil.
The Anchor Borrowers Program also enabled agro-processors and manufacturers to source their inputs from local sources, rather than relying on the importation of these items.
We also deployed other intervention facilities such as the Commercial Agricultural Credit Scheme, and the Real Sector Support Fund. These funds were used to channel single digit interest loans through our Deposit Money Banks and other Participating Financial Institutions to beneficiaries to support improved growth in the agriculture and manufacturing sectors. The effectiveness of these interventions in supporting the growth of our local industries has been supported by our FOREX restrictions on the importation of items that can be produced in Nigeria.
13. We also embarked on measures to discourage smuggling of restricted items into the country, by imposing restrictions on the use of financial institutions in Nigeria by identified smugglers, as their activities undermined the growth of our local industries. These measures are aiding our efforts to support local cultivation of goods in areas such as cotton, rice, palm oil etc.
14. We also sought to improve access to credit for MSMEs given the critical role they play in supporting the growth of our economy. Poor access to credit has been highlighted as a significant constraint to the growth of MSMEs. Moreover, given the impact of the recession, it was more important to restart the flow of credit to MSMEs to enable them engage in productive activities that would support growth. As part of efforts to support this objective, we created a N220bn MSME funds, which has been critical in supporting the growth of MSMEs in the agriculture and manufacturing sectors.
15. We set up the National Collateral Registry and supported the passage of legislation governing the activities of the National Collateral Registry and the Credit Bureaus. These measures have helped to encourage the flow of credit to SMEs by allowing them to provide movable assets as collateral in order to obtain finance from banks, relative to the previous process which required that they provide fixed assets. So far over N400 billion worth of assets have been registered in the collateral registry by MSMEs. The activities of the credit bureaus are also reducing the risk encountered by banks in lending to businesses, as it has helped to identify creditworthy borrowers.
These two initiatives contributed to the improvement in Nigeria’s Doing Business Scorecard in the World Bank’s 2017 Doing Business Rankings of 180 countries, as Nigeria moved up by 24 points from 169 to 144.
16. Payment System
Conscious that over 40 per cent of eligible Nigerians in 2015 lacked access to financial services, we embarked on a couple of steps to improve access to finance.
Through initiatives such as the Shared Agent Network Facility(SANEF) and the launch of our policy on Payment Service Banks, which enables non-banks to provide limited financial services, we sought to encourage the use of technological tools in improving access to finance for people who live in underserved parts of the country.
We also set up a payment services management department solely dedicated to enabling the build-up of a robust payment systems infrastructure, while seeking to contain the risk to the financial system that could emerge from the use of digital channels. As a result of our efforts, the total volume of retail electronic payments has witnessed a threefold increase over the last five years.
New financial access points are being created in parts of the North East and North West as a result of measures deployed by the Central Bank to extend financial services to the underserved in our rural communities.
17. Salary Bailout
The drop-in commodity prices and the resulting effects on government revenue, led to a severe drop in the earnings of most states in the country. Over 34 states incurred huge salary arrears and were unable to provide essential services, which led to the decision by the National Economic Council in June 2015, that the CBN work with Deposit Money Banks to provide support to state governments. In order to avert prolonged hardship in states, we provided an assistance program to states, which helped them to settle their overdue salary and pension obligations. These measures helped to ease some of the budget difficulties faced by state governments between 2015 – 2017.
It also provided enough cushion for states to begin to develop plans to generate revenue from alternative sources in an attempt to make the states economically viable.
While these results are reassuring, I think it’s fair to state that our task of building a stronger economy is far from complete. The pace of GDP growth remains fragile and is below the rate of our annual population growth at 2.7 per cent. The recovery of our economy from the recession has not resulted in a significant reduction in our unemployment rate. We are yet to see a substantial increase in credit to the private sector by our financial institutions.
The unexpected drop in crude prices given its impact on our economy also derailed our attempts at achieving some of the steps outlined in our vision such as bringing down the rate of T-Bills and in reducing the unemployment rate.
Our inability to address these challenges only served to reinforce our view that the CBN must continue to play an active role in supporting the growth of our economy, and redirect our emphasis on sectors that have the ability to support improved wealth and job creation for Nigerians such as the agricultural and manufacturing sectors.
19. Downside Risk to Growth in the near to medium term
Beyond our domestic challenge of high unemployment and subdued growth, our economy is faced with 3 external events, which have the ability to affect our growth trajectory over the near to medium term. First, rising trade tensions between the United States and China, United States and Mexico and subdued growth in the Eurozone as well as other emerging economies such as China, India, South Africa, Brazil, Argentina and Turkey, are affecting the outlook for global growth in 2019 and 2020.
The World Bank according to its latest report, projects that global growth will decline to 2.6 per cent in 2019 from 3.0 per cent in 2018, as a result of the above-mentioned factors.
20. The second external challenge that may emerge from rising trade tensions and a potential slowdown in growth in advanced and emerging economies, is the impact it could have on capital flows to emerging markets. The risk of sudden stops and reversals of capital flows has increased as some investors weigh the benefits of investing in safe assets in advanced economies relative to assets in emerging markets.
Third, we are also witnessing rising volatility in the crude oil market occasioned by the rapid increase in the supply of shale oil by the United States, which has seen its production rise from 9 million barrels in 2017 to over 12 million barrels today. The rise in US production continues to put downward pressure on crude oil prices, despite restrictions on crude oil output by OPEC members and sanctions by the US on the purchase of crude oil from Iran and Venezuela.
21. Our Vision for the Next 5 years
Fellow Nigerians, few weeks ago, we held consultations with some banks and business leaders in the Private sector. We thank them immensely for their thought-provoking ideas and counsel. We intend to sustain the pace of those consultations as this would act as barometer for measuring the progress being made in the implementation of our policies. Our assessment of the outcome of that deliberation shows that with concerted efforts, the challenges facing the country are easily surmountable.
Consequently, working closely with our fiscal authorities, we pledge to target a double-digit growth by the next five years and at the CBN, we commit to working assiduously to bringing down inflation to single digit; while accelerating the rate of employment. Put succinctly, our priorities at the CBN over the next 5 years are the following; First, preserve domestic macroeconomic and financial stability;
Second, foster the development of a robust payments system infrastructure that will increase access to finance for all Nigerians thereby raising the financial inclusion rate in the country; Third, continue to work with the Deposit Money Banks to improve access to credit for not only small-holder farmers and MSMEs but also Consumer credit and mortgage facilities for bank customers.
Our intervention support shall also be extended to our youth population who possess entrepreneurship skills in the creative industry.
This group deserve our encouragement. We shall also during this intervening period encourage our Deposit Money Banks to direct more focus in supporting the Education Sector. Fourth, grow our external reserves; and fifth, support efforts at diversifying the economy through our intervention programs in the agriculture and manufacturing sectors.
We are confident that when implemented, these measures will help to insulate our economy from potential shocks in the global economy.
In my second term in office, part of my pledge, is to work to the best of my abilities in fulfilling these objectives.
22. Macroeconomic Stability
On Macro-Economic Stability, over the next 5 years, with a key emphasis on supporting improved GDP growth and greater private sector investment, we intend to leverage monetary policy tools in supporting a low inflation environment, while seeking to maintain stability in our exchange rate. As a result;
• Decisions by the Monetary policy committee on inflation and interest rates will be dependent on insights generated from data on key economic variables.
• We would also strive to continue to sustain a positive interest rate regime to the delight of our important stakeholders.
• Monetary policy measures embarked upon by the CBN will be geared towards containing inflationary pressures and supporting improved productivity in the agricultural and manufacturing sectors.
• Working with other stakeholders, we intend to bring down the cost of food items, which have considerable weight in the Consumer Price Index basket.
• Our ultimate objective is to anchor the public’s inflation expectation at single digits in the medium to long run. We believe a low and stable inflationary environment is essential to the growth of our economy because it will help support long term planning by individuals and businesses.
• It will also help to lower interest rates charged by banks to businesses thereby facilitating improved access to credit, and a corresponding growth in output and employment.
23. Exchange Rate Stability
We will continue to operate a managed float exchange rate regime in order to reduce the impact which continuous volatility in the exchange rate could have on our economy.
• We will support measures that will increase and diversify Nigeria’s exports base and ultimately help in shoring up our reserves. While the dynamics of global trade continues to evolve in advanced economies, Nigeria remains committed to a free trade regime that is mutually beneficial; but, particularly aimed at supporting our domestic industries and creating jobs on a mass scale for Nigerians.
• We intend to aggressively implement our N500bn facility aimed at supporting the growth of our non-oil exports, which will help to improve non-oil export earnings.
• We will launch a Trade Monitoring System(TRMS) in October 2019, which is an automated system that will reduce the length of time required to process export documents from 1 week to 1 day. This measure will help support our efforts at improving our non-oil exports of goods and services.
• We will also work with our counterparts in the fiscal arm in supporting improved FDI flows to various sectors such as agriculture, manufacturing, insurance and infrastructure.
These measures while supporting improved inflows into the country, will help to stabilize our exchange rate and build our external reserves.
24. Financial System Stability
A resilient and stable financial system is imperative for continued growth of our economy given the intermediation role that financial institutions play in supporting the needs of individuals and businesses.
As a result, • We will continue to improve our onsite and off-site supervision of all financial institutions, while leveraging on data analytics and our in-house experts across different sectors, to improve our ability to identify potential risks to the financial system as well as risks to individual banks.
• In the next five years, we intend to pursue a program of recapitalizing the Banking Industry so as to position Nigerian banks among the top 500 in the world. Banks will, therefore, be required to maintain a higher level of capital, as well as liquid assets in order to reduce the impact of an economic crisis on the financial system.
• With the rise in digital payments and cyber security threats, we will develop a robust mechanism that will help ensure that the necessary safeguards are put in place by banks and financial institutions to protect against loss of data, fraud and cyber incursions in their respective systems.
25. Robust Payment System Infrastructure
An efficient payment system is vital to the effectiveness of monetary policy interventions.
It also helps in reducing the cost involved in payment for goods and services.
The Payment Services Management Department in the CBN will work to enable the buildup of a robust and secure payments infrastructure in Nigeria that is reliable and easy to access.
• We will reinvigorate our efforts at driving the cashless initiative across the country, due to the immense
efficiency gains that will be derived from it, and the impact it could have on our financial inclusion drive.
• Given Nigeria’s large size, and the cost involved in building bank branches across the country, the payment system department would support the spread and utilization of digital modes of transactions so that every Nigerian will have access to financial services.
• A strong emphasis will also be placed on improving speed and efficiency of payments channels, while working to ensure that digital channels are safe and secure. This will help to build confidence in our nation’s payment system.
• In order to improve utilization rate, we will continue to ensure that payment channels are interoperable, which will enable individuals with digital devices to transact across different banks or payment modes.
• Through measures such as the cashless initiative, USSD, Mobile Banking, agent networks and Payments Service Banks, Nigerians can expect to see significant improvements in the payment systems infrastructure over the next 5 years.
• We will also work with NIBSS, Banks and Fintechs in developing a regulatory sandbox. This sandbox will enable us to test financial
innovations by Fintechs and Banks in a controlled environment, in order to assess its impact on the growth and safety of our financial system.
26. Targeted Development Finance
Building on the success of our Anchor Borrowers Program and other intervention programs geared towards supporting the growth of our agriculture and manufacturing sectors,
and in keeping with the recent Presidential Directives, we intend to:
• Boost productivity growth through the provision of improved seedlings, as well as access to finance for rural farmers in the agricultural sector, across 10 different commodities namely: Rice, Maize, Cassava, Cocoa, Tomato, Cotton, Oil-palm, Poultry, Fish, and Livestock/Dairy.
• Our choice of these 10 crops is driven by the amount spent on the importation of these items into the country, and the over 10 million jobs that could be created over the next 5 years if efforts are made to expand cultivation and processing of these items in Nigeria. So far, we have held series of engagements with importers and producers of these products. Most of them have committed that they would install
or expand their production capacities in Nigeria. We believe these measures will help to boost not only our domestic outputs but also improve our annual non-oil exports receipts from $2bn in 2018 to $12bn by 2023.
• Our intervention programs will strengthen the linkage between farmers and agro-processors/manufacturers by ensuring that the output of farmers is purchased by agro-processors/manufacturers.
• This linkage with agro-processors is necessary in order to prove that farmers are creditworthy individuals with bankable contracts. It will also help to unlock private capital flows from financial institutions to farmers, in order to enable farmers meet orders from agro-processors.
• To complement the progress made so far as well as the lesson learnt from the conduct of previous programs, we intend to strengthen the capacity building arm of the Anchor Borrowers Program, which will help support better farming practices and higher outputs for farmers.
• Through the credit bureaus, we will also leverage technological tools such as analytics in
identifying and supporting farmers that have exhibited good credit behavior, in repayment of their loan obligations. This measure will improve their ability to source for financing from commercial banks.
• We will introduce a non-oil export aspect to the anchor borrowers’ program, which will be focused on linking smallholder farmers to international buyers.
• To discourage the activities of smugglers, who bring in restricted goods into the country, perpetrators and their affiliated companies will be blacklisted and denied access to banking services in the entire country.
• This renewed focus of our intervention program, coupled with increased support for research and development on improved seedlings and enhanced farming practices, will help drive exponential growth of our agricultural and manufacturing sectors.
27. Financial Inclusion
Over the next five years, through initiatives and policy measures such as the Shared Agent Network (SANEF) and the payment service banks, we intend to broaden access to financial services to individuals in underserved parts of the country.
• Our ultimate objective is to ensure that 95 per cent of eligible Nigerians have access to financial services by 2024.
• We will also intensify our financial literacy and consumer protection programs such that current and eligible bank customers are fully aware of the financial services being offered to them as well as the cost of utilizing these services, which will enable them to make well-informed choices.
• Besides providing valuable information to banking customers, we are committed to developing and enforcing strong rules to protect consumers. • Our banking supervisory and consumer protection department at the CBN will ensure that dispute resolution mechanism in financial institutions are not only efficient but also timely, in order to maintain the confidence of the Nigerian populace in the utilization of banking services.
28. Access to Credit
Beyond our intervention programs, we are also working to encourage banks and financial institutions to lend from their balance sheet in order to support the growth of critical sectors of the economy, such as Agriculture, MSMEs and the Real Estate Sector. Greater emphasis on improving consumer spending and business investment by MSMEs is critical to sustainable double-digit growth of the Nigerian economy.
• MSMEs today constitute over 90 percent of businesses in the country. Through the national collateral registry, over N400 billion worth of movable assets have been registered by MSMEs in the registry. We intend to triple this number over the next 3 years.
• Our ultimate objective is to broaden the range of collaterals that MSMEs can provide to banks in order to obtain credit.
This will help improve access to credit for farmers and MSMEs, and it will also support the growth of their respective businesses.
29. Unique Identification
• In order to ease the constraint poor identification has on availability of credit to prospective banking customers, the CBN will support an aggressive enrollment of prospective banking customers in the informal sector onto the BVN system.
• The current enrollment of 38 million unique banking customers will be expanded to 100 million over the next 5 years. Ongoing partnership with NIMC will also enable integration between the two databases.
• This effort will improve the comfort level on banks in providing services to an expanded customer base. It will also aid in the development of a credit profile for banking customers, which will assist in improving access to credit for creditworthy borrowers by banks.
30. Lending to MSMEs
• The recently established NIRSAL microfinance bank will also work to improve access to credit for MSMEs in rural communities, which will help stimulate improved economic activities.
• In order to reduce the constraints which high account receivables, have on the growth and operations of MSMEs, we will support the development of a Trade Receivables Portal, which will enable MSMEs trade their invoices with financial institutions in order to improve their cash flow and support ongoing operations of their respective businesses.
31. Consumer Credit
• Today, less than 10 percent of adult Nigerians who have a bank account, utilize financial products offered by banks, such as credit cards, personal loans, mortgage loans, auto loans and consumer durable loans. • Consumer credit is critical to the growth of our economy as it will help boost consumer spending, accelerate improved investments by businesses, who seek to meet the demand of consumers. Improved consumer spending and investments by businesses will ultimately help to spur the growth of our economy and support our job creation efforts.
• In order to spur lending to consumers, a lending framework will be announced by the CBN, under which large departmental stores, automobile companies,
equipment leasing companies, in partnership with financial institutions, and the credit bureaus, will be able to provide credit facilities at reasonable interest rates to consumers. This will help to spur consumer spending and aid our efforts at driving the growth of our economy.
• The framework being developed will support the emergence of a digital, less burdensome process for consumers who seek to access such facilities.
• Credit patterns of consumers will be shared with credit bureaus to assess repayment patterns and credit histories of customers. This will also enable financial institutions to provide additional credit to creditworthy borrowers.
• Financial institutions will also be mandated to disclose to consumers the upfront charges involved in accessing such credit facilities, in order to prevent consumers from being abused by money lenders.
32. Mortgage Lending
• Fellow Nigerians, you will agree with me that a lot of equity is currently tied down in mortgage assets which are today entirely cash backed. In our effort to support the growth of Nigeria’s real estate industry, the CBN will work in developing a framework that will enable banks to securitize mortgage loans, which can then be sold in the capital markets.
• Adequate safeguards will be put in place to reduce the risk of delinquency in the mortgage-backed assets that will be sold in the capital markets.
• These measures will reduce the credit and liquidity risk to banks of holding these assets on their balance sheets and improve the amount of funds available to support mortgage loans. It will also reduce the high cost of obtaining mortgages for banking customers.
I will like to conclude my remarks by stating that although these goals are onerous and tasking, the CBN will remain committed to fulfilling its mandated objectives of price and exchange rate stability. We will continue to work to safeguard the stability of our financial system, while supporting the development of a payment system infrastructure that will improve access to credit for all eligible Nigerians. Nevertheless, additional emphasis will be placed on supporting greater growth of our economy and in reducing unemployment, through targeted interventions in the agricultural and manufacturing sectors.
Over the next five years, this will be the task for the Central Bank of Nigeria under my leadership, and we intend to do our very best to achieve these objectives.
I thank you for your attention.
Godwin I. Emefiele Governor Central Bank of Nigeria